Report: Airbnb rentals now 9% of room inventory in major cities

In the third quarter of 2015, the number of Airbnb accommodations in Los Angeles nearly doubled from a year earlier.

Airbnb accommodations now account for 9% of the total
lodging units in the 10 largest U.S. markets and appeared to be adding units at
a substantially faster clip than the U.S. hotel industry, a new study has
revealed.

The data, in a report released by CBRE Hotels (formerly
PKF Hospitality), suggests stiffer-than-expected competition for developers of
new hotels in major markets such as New York, Los Angeles and San Francisco.

In New York, Airbnb units accounted for almost 23,000, or
about 16%, of the 140,000 total lodging units (hotel and Airbnb inventory
combined) as of September, the most recent month tracked in the study.

The CBRE study found that Los Angeles’ 13,000 Airbnb
accommodations accounted for 12% of that city’s lodging units, while Airbnb units
in San Francisco and Miami comprised 11% and 9.2% of those cities’ lodging
units, respectively. For the study, CBRE culled data from both STR and Airdna,
which provides data to vacation rental entrepreneurs and investors.

Airbnb’s presence was also reflected in revenue numbers.
For the 12 months ended September 2015, revenue generated by Airbnb hosts
equaled almost 6% of hotel room revenue in Los Angeles, while in New York,
Austin, Oakland and San Francisco, Airbnb revenue equaled about 5% of hotel
revenue.

Meanwhile, the average number of active U.S. Airbnb units
(defined as places that had been available for rent during the previous month)
doubled, to about 173,000, between October 2014 and September 2015. The fact
that hotel supply increased just 1.1% last year, about 55,000 rooms, suggests
that Airbnb is adding units faster than hoteliers, though the number of Airbnb
units that enter or exit the market varies from month to month as hosts respond
to seasonal activity or look to capitalize on major local events that will draw
more overnight visitors.

Airbnb hosts generated $2.4 billion for the year ending
last September, according to the study. That’s about 1.6% of the $150 billion
U.S. hotels generated last year, according to research firm Phocuswright, and
puts Airbnb’s annualized, and rapidly growing, revenue at about half of Hyatt
Hotels’ and more than double Choice Hotels International’s.

Granted, Airbnb’s presence is far more prevalent in
so-called gateway cities than it is for secondary markets. Airbnb’s 173,000
units last September accounted for about 3.3% of the approximately 5.2 million
U.S. lodging units.

Still, while the numbers for secondary markets are far
smaller, the number of active Airbnb listings in the third quarter of 2015
almost quadrupled from a year earlier in Richmond and Norfolk, Va., and almost
tripled in Cincinnati, Indianapolis, Philadelphia, Denver and Phoenix.

By comparison, the number of units almost doubled in Los
Angeles, New York, San Francisco and Washington.

“With the fluid dynamic of Airbnb, where supply can meet
added demand for short periods of time, it creates less of a demand for
traditional hotels during major events,” said Jamie lane, CBRE Hotels' senior economist
and the report’s co-author. “We’re just now getting to levels where we might
see Airbnb actually reducing both [average room rates] and new construction
going forward.”

CBRE released its report about two weeks after the hotel
trade group American Hotel & Lodging Association (AH&LA) released its
own study, alleging rampant illegal activity among Airbnb’s most prolific hosts
and pushing for more stringent regulations on home rentals.

Citing a study it commissioned from Penn State
University, the AH&LA estimated that almost 40% of Airbnb’s revenue in the
12 largest U.S. metropolitan areas was generated by hosts with at least two
units, and that almost 30% of revenue was generated by so-called full-time
hosts, who book units at least 360 days per year.

Airbnb, which called the AH&LA report “deeply flawed”
and “misleading,” does not disclose its annual revenue figures or growth
metrics.

In response to the CBRE findings, Airbnb spokesman Nick
Papas said, “Airbnb is succeeding because our people-to-people platform
provides transformative experiences by bringing people together to share their
lives by allowing everyday people to supplement their incomes by sharing their
homes.”

Lane said that the prevalence of hosts managing multiple
Airbnb units and the percentage of Airbnb revenue they have generated in cities
such as Miami surprised him.

Even so, he said the report’s objective was merely to
present data about Airbnb’s presence in the U.S. and its potential impact on
the lodging sector, not as a lobbying tool.